I came across the following in an article by Chris Clugston titled On American Sustainability. If the analysis is correct, our current debate on how to fix the system is just so much hot air.
Further, and even more discouraging, is the fact that the accumulating pool of IOUs—assuming the government ultimately repays them—plus the total projected payroll tax payments by tomorrow’s workers, will fall far short of covering the total projected benefits promised to tomorrow’s expectant beneficiaries. In fact, the magnitude of our social entitlement “fiscal gap”—the present value of the total amount by which the three programs are currently underfunded—exceeded $77 trillion ($77,388) at the end of 2007— $68 trillion of which was attributable to Medicare and Medicaid. And our $77+ trillion fiscal gap increases by $2.7 trillion every year that we fail to take action to eliminate it.
To put our $77 trillion fiscal gap into perspective, our total national net worth—the difference between the total assets and total liabilities associated with all US individuals, corporations, and governments—was only $73 trillion in 2007. We could conceivably sell everything we own and still not be able to fully fund our future social entitlement obligations. Our only options for resolving our social entitlement dilemma are to increase payroll taxes by over 100%, from 15.3% to 33.3% of earnings, immediately and forever;7-14 to cut all social entitlement benefits by at least 50%, immediately and forever; to cut all non-entitlement federal government spending by 77.8%, immediately and forever;7-15 or some combination thereof.
The inescapable consequence associated with our fiscal gap is a permanent and significant reduction in purchasing power—for future program beneficiaries, future workers, or future recipients of non-entitlement federal government spending. And the future starts now, as the 78 million “baby boomers” who expect to receive social entitlement benefits far in excess of their total contributions, begin to reach retirement age.
The difference between cash receipts and cash disbursements for the Medicare Trust Fund (HI) was projected to go “cash negative” in 2008; the Social Security Trust Fund (OASDI) will go cash negative in 2017. Beginning in 2009 for Medicare and in 2018 for Social Security, the government will no longer be able to “borrow” yearly trust fund surpluses, and must actually begin to repay its IOUs to the trust funds through borrowing, taxation, or printing money. Going forward, as the actual net payout amount associated with the “big three” diverges increasingly from the projected net payout amount, purchasing power for a large portion of our population will erode continuously as entitlement benefits are reduced continuously and/or payroll taxes are increased continuously.
This may be so, but I've seen countries much poorer than the U.S. provide free healthcare that was fairly good and cheap, so I have a hard time believing that the problem is the social net itself. I suspect the real problem is the corporate monopolies on health services and the collusion between business interests and government. The problem is, of course, made much worse by the trillion dollars in direct and indirect costs that goes into the U.S. military military-industrial complex year after year. At any rate, anybody who thinks this gaping wound will disappear with a quick band-aid is delusional.